GlaxoSmithKline Pays $150 Million
To Settle Drug Pricing Fraud Case

WASHINGTON, D.C. - GlaxoSmithKline has paid over $150 million to resolve
allegations that the company violated the False Claims Act through fraudulent
drug pricing and marketing of two anti-emetic drugs, Zofran and Kytril, used
primarily in conjunction with oncology and radiation treatment, the Justice
Department announced today.

The United States alleged in settlement documents that GlaxoSmithKline-one of
the world's largest pharmaceutical manufacturers-engaged in a scheme to set and
maintain fraudulent and inflated prices for Zofran and Kytril knowing that
federal healthcare programs established reimbursement rates based on those
prices. The difference between the reimbursement rate of the federal health
care programs and the actual price paid by healthcare providers for a drug is
commonly known as the "spread." The larger the spread on a drug, the larger the
profit or return on investment for the provider. GlaxoSmithKline allegedly used
the spread to market, promote, and sell the drugs to existing and potential
customers. Because reimbursement from federal programs was based on the
fraudulent, inflated prices, the United States contended that GlaxoSmithKline
caused false and fraudulent claims to be submitted to federal healthcare
programs.

"This agreement marks another in a series of cases in which a pharmaceutical
manufacturer has settled claims that its fraudulent drug pricing cost federal
healthcare programs and taxpayers millions of dollars," said Assistant Attorney
General Peter D. Keisler of the Justice Department's Civil Division. "The
Justice Department will continue to pursue these types of fraud schemes
vigorously to make clear that we will not tolerate fraudulent pricing practices
designed to reap profits for drug companies and doctors at the expense of
healthcare programs for the poor and the elderly."

The United States also alleged that, with respect to Kytril, the drug company
engaged in a "double dipping" billing scheme by encouraging customers to pool
leftover vials of Kytril to create an extra dose, which then would be
administered to a patient and re-billed to Medicare and other federal
healthcare programs.

"Fraudulent pricing of prescription drugs can cost American taxpayers millions
of dollars and undermine the financial integrity of the healthcare system,"
said U.S. Attorney Michael J. Sullivan of the District of Massachusetts. "To
safeguard our nation's healthcare programs we will continue to aggressively
investigate and prosecute healthcare fraud violations whether by pharmaceutical
companies or individual practitioners."

"As our nation struggles to contain healthcare costs, we must ensure that drug
manufacturers do not take advantage of the poor, the elderly or the sick by
illegally inflating the price of prescription drugs. That a manufacturer would
fraudulently inflate the cost of a drug used primarily to reduce the side
effects of cancer treatments is unconscionable," said U.S. Attorney R.
Alexander Acosta of the Southern District of Florida.

The investigation commenced after the filing of a civil False Claims Act suit by
a small, home-infusion company, Ven-A-Care of the Florida Keys, Inc., and its
principals. The civil False Claims Act allows for private persons to file
whistleblower suits to provide the government information about wrongdoing.
Where persons submit or cause others to submit false or fraudulent claims to
the United States, the government is entitled to recover treble damages and
$5,500 to $11,000 for each false or fraudulent claim. In cases in which the
government is successful in resolving or litigating its claims, the
whistleblower may receive a share of the recovery by receiving from 15-25% of
the amount recovered. As part of this settlement, the Ven-A-Care whistleblowers
will receive a share of approximately $26 million.

As part of a condition for doing business in the future with providers who do
business with the Medicare and Medicaid programs, GlaxoSmithKline has agreed to
enter into an addendum to its existing Corporate Integrity Agreement with the
Office of Inspector General of the Department of Health and Human Services
that, among other things, will require the company to report accurate average
sales prices and average manufacturer's prices for its drugs covered by
Medicare and other federal healthcare programs.

"Any pharmaceutical company that intentionally inflates the cost of prescription
drugs with elaborate pricing schemes robs states and beneficiaries nationwide of
millions of Medicare and Medicaid dollars. We will not tolerate any company
abusing programs intended to benefit our most vulnerable citizens," said Daniel
R. Levinson, HHS Inspector General.

"CMS has a strong commitment to protect the integrity of the federal healthcare
programs, ensuring that the financial burdens are not shifted to the programs,
beneficiaries or taxpayers. This agreement reinforces that commitment," said
Mark B. McClellan, M.D., Ph.D., Administrator for the Centers of Medicare and
Medicaid Services.

Of the $150 million settlement, the federal recovery is approximately $140
million and the states' recovery for their share of Medicaid is $10 million.

The investigation was conducted by the Civil Division of the Department of
Justice, the United States Attorney's Offices for the Districts of
Massachusetts and the Southern District of Florida, the Office of Inspector
General for the Department of Health and Human Services, the Office of Program
Integrity of TRICARE Management Activity, and the National Association of
Medicaid Fraud Control Units.